Circuit City became the largest retailer to fall victim to the expanding financial crisis Friday, announcing it will shut down its remaining 567 U.S. stores at the cost of 34,000 more jobs after failing to sell the business.
The closure of the nation’s second-biggest consumer electronics retailer spells more trouble for the nations malls, and is the latest casualty of an unprecedented pullback in consumer spending that has claimed KB Toys, Mervyns LLC and Linens ’N Things.
“Very, very sad,” said Alan L. Wurtzel, son of company founder Samuel S. Wurtzel and himself a former chief executive of Circuit City. “I feel particularly badly for the people who are employed or until recently were employed.”
I have never done any business with that chain. But I feel badly for the people who worked there.
Circuit city has been headed down for a while. I don’t think it is the economy that did it, I think it was a result of advancing technology and online marketing. When everything you really need is available from Walmart or Amazon, why go to a specialized store? I’m amazed that Best Buy still survives and wonder how long that will last.
Barack’s largely right. Circuit City was ailing even in boom times. It exited the consumer appliance market (washers, refrigerators) several years ago because it couldn’t compete with Best Buy. The recession is doing what recessions are supposed to do: weed out weak businesses to lay the groundwork for a healthier economy.
At least, that was the plan until recently….
An open letter to Circuit City
Dear Circuit City,
Hello. Today I heard the news that you were going bankrupt and shutting down operations. I wasn’t surprised; I had been expecting it for years. I can honestly say I am overjoyed.
You probably don’t remember me, so let me refresh your memory. I worked for you eight years ago. You recruited me and I relocated to Chicago earlier this decade. I worked in your Chicago Regional Office. I am writing to tell you I am glad to hear of your demise. Simply put, you deserve it. I know you may be surprised to hear this so let me explain further.
You spent more than a month recruiting me and promising me incredible things. You said the income and opportunities were amazing. Sadly, after I accepted your offer everything changed. I relocated my family from more than 300 miles away and quickly realized what you didn’t tell me would fill a novel.
The income, bonus, and benefits were much less than what I was told. The workload was much more than I expected. You painted an unrealistic picture about my compensation. You exaggerated my income potential, and in many ways, when it came to bonus, benefits, and workload, you outright lied. When I approached you about this your response was “sorry, I guess you should have asked more questions during your interview”. I now know how your customers felt when you would lie to them just to close the sale.
I worked for you putting in 70 hours a week and when I did the math, I figured out I had taken a 15% pay cut. Without question I can say working for Circuit City was the biggest personal and financial mistake I had made in my life.
I did as much research as I could on your company, but in the days before Wikipedia I was not fully informed. Once I began working for you I realized exactly how mismanaged you were. Here are a few examples:
-You spent far too much time trying to save money by doing it all yourself. You opened your own credit card division (which failed), you built your own cash register hardware/software (which was outdated by 1998). You invented and tried to market your DIVX DVD technology and refused to be bought out (you wrote off 200million from this in 2000) http://en.wikipedia.org/wiki/DIVX_(Digital_Video_Express). I could list more..
-You refused multiple company buyout attempts. In 2003 you refused a $13.00 per share offer by a Mexican billionaire. In 2005 you refused a $17 per share offer by a California private equity company. In 2008 you rebuffed a buyout attempt by Blockbuster. You refused all of these offers so you could eventually see your stock drop to 0.11 cents and watch as you went under (way to go!).
-You engaged in unethical activities. I watched as our Chicago Regional VP spent more than a year telling everyone in the Region that Circuit City was committed to Commission sales Associates. Then you laid off all commission sales people in February of 2003. I watched in March of 2007 as you fired any employees that maid “above the company average” for their position. 3,500 employees were fired, including many of your most experienced managers. Everyone in my regional office was aware that salaried managers were in danger of termination if they made too much money. In 2001 I watched as two District Managers, A regional Director, and several Store Managers were terminated so they could be replaced by people making 30% less (do you remember a DM’s initials of M.R.? Do you wonder why your Chicago Store Manager turnover in 2001 was 105% – 36 SM’s left from your 34 Chicago store’s)
-You engaged in illegal activities. You created and required employees to follow a strict policy of arbitration for all disputes. A policy so one sided and punitive toward your employees, most state and federal courts have thrown it out. You’ve been sued multiple times by individuals and State Attorney generals for dishonest practices involving your extended warranty programs. I personally watched as you implemented a Management Training Program “Manager Books” that required hourly employees to work off the clock (Illegal) if they wanted to get promoted.
-Your employee benefits were a joke. Your health coverage was outrageously expensive. Your 401k was horrible, your annual pay raises were paltry, and your vacation “time away” was nothing more than an excuse to avoid paying out earned vacation and make turning down vacation requests easier.
-You made huge managerial mistakes. You’re 1999 Florida remodel program was a complete failure and ran 200% over budget. You company wide yr2000 “rapid remodel” program was a fiasco. You got out of the appliance business in August 2000, just before the biggest home ownership expansion in history. You used the space to expand computer accessories, exactly when the high-tech bubble burst. You also committed to, and invested in, your CD music and home audio departments right before the conversion to digital and online music. (perhaps you would have been better off keeping appliances for another six years and reducing your CD department?!?!)
-You invented the 15% restocking fee and refused to refund some merchandise or wave the 15% fee, even when mistakes were made by employees and the return was your fault. You managed to alienate huge numbers of customers who simply never came back to your stores.
I’m sorry to say it, but Circuit City, you deserve liquidation. You were truly a horrible company. I don’t know when you went wrong, but I’m embarrassed to say I worked for you. Your consistent mismanagement and disregard for your customers and employees had brought you to this Fridays results.
I know this letter may sound uncaring. For those employees who have worked at Circuit City less than 18 months, I sympathize with you. I worked the same amount of time before finally giving up and leaving. When I resigned, my Regional Manager tried to tender a counteroffer but I just laughed. I told him I wouldn’t stay if they countered with 20% more. I simply couldn’t work for a company so corrupt. If you’re an employee who’s worked there less than 18 months I’m sorry for you. If you’ve been there since before March of 2007 you’ve gotten what you deserve! If you were there in 3/07’ to see 3,500 employees (including managers) terminated for “making too much”. If you knew the company was capable of that then you have know excuse. You knew how unethical your company was!
I know I speak for a lot of former employees and many disgruntled customers when I say…. Circuit City can go to hell!!!!!
-someone who was there and knows
Not two weeks ago, Elfie and I were chatting about how we never think to go to Circuit City; when we need computer stuff, we hit Best Buy, and if we need office-type stuff– calculator, etc– we hit Staples. Actual electronic parts? Radio shack.
All of those are *if* the quality at WalMart is too low.
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I just dropped almost $1700 in Circuit City last week. The irony is overwhelming.
What killed CC was their prices, even on sale, were more than what Best Buy’s regular prices were.
When the local store was closing out, I looked at their laptops. The prices were still higher even with the discounts.
Priced themselves right out of business…